Monday, February 29, 2016

EWCA Requires Apportionment in Accounting of Profits

See here for Professor Tom Cotter’s discussion of the recent EWCA decision on accounting of profits in Design & Display Ltd v Ooo Abbott & Anor [2016] EWCA Civ 95. I won’t be blogging on this aspect of the case myself. While it is good to see the EWCA recognizing the need for apportionment profits between patented and unpatented features of an infringing product, the English courts are still hampered by unfortunate legacy of United Horse-Shoe & Nail Co v John Stewart & Co. (1888), 5 RPC 260 (HL), and have not fully embraced the importance of non-infringing alternatives to an accounting of profits which was recognized by the SCC in Schmeiser 2004 SCC 34, [102]. Consequently, English analysis of apportionment remains unstructured, and their case law on this issue will remain of limited interest to Canadian law unless and until the English courts adopt the more rigorous and conceptually sound Canadian methodology.

The EWCA also discussed at some length the difficult question of whether to allow an infringer to deduct some part of its fixed costs (such as general overhead or rent) from the profits to be disgorged. That issue has also arisen in several Canadian cases, The EWCA discussion is interesting at first read, and Professor Cotter is of the view that the court “got this point right,” but I wonder if the analysis might be hampered by the fact that the court has not fully embraced the non-infringing alternative analysis. I will blog on this aspect of the case after I’ve had a chance to review it more carefully.

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